If shrinking your tax liability is high on your list of priorities, a few states stand out. The winners on our list below either have no state income tax, no tax on retirement income, or a substantial discount on the taxes levied on retirement income. But that’s just the start.
While several additional states have no state income tax, the states that made our list also have favorable sales, property, inheritance, and estate taxes.
• South Dakota
If those seven locations aren’t ideal, consider the next tier of tax-friendly states. Tax benefits aren’t quite as high as those above, but they do stand out in one specific category: no taxes on social security income.
That’s not to say they don’t make up for it in other areas, however. Washington State, for example, has no state income tax, but does have a 6.5% state sales tax. Still, it’s always beneficial to avoid income tax when possible.
• New Hampshire
• South Carolina
• West Virginia
Empowering people to make smart financial decisions.
Top States Favored by Retirees
While Alaska may have favorable tax policies, lounging in Anchorage may not be your idea of a relaxing retirement. To uncover where retirees actually want to live, let’s dive into another set of numbers.
According to the Federal Interagency Forum on Aging Statistics, six states are the standout favorites among the over-65 crowd.2 No other states surpass their density of residents over the age of 65:
• Maine (20.6%)
• Florida (20.5%)
• West Virginia (19.9%)
• Vermont (19.4%)
• Montana (18.7%)
• Delaware (18.7%)
Best Overall State for Retiring
Now, let’s compare. By cross-referencing our list of “Best States for Minimizing Taxes in Retirement” with our list of states most densely populated with retirees, we find that only one state makes both lists.
The Sunshine State offers favorable taxes, pleasant climate, and reasonable cost of living.